In my prior post, which I hope everyone read, I noted how much you will need in savings in order to have a reasonably comfortable retirement. Here we will discuss ways to accumulate the money.
I am sure many of you read my post with dismay thinking, “How can I accumulate almost two million dollars?” Well, it is very doable BUT it takes discipline, strategy, and especially time.
Time is the key. If you only have a few years to accumulate wealth until you retire, you probably won’t be able to get the savings that would be required. However, if you have at least 15-20 years or more before retirement, accumulating the necessary funds isn’t hard.
For example, if you save $7,000 per year and invest it in an average performing mutual fund, by the end of 20 years, your investment will be worth over $300,000. Thirty years of savings would result in a net worth of almost $700,000. If you do this throughout a 40-year working life, your investments would be worth over $3 million dollars. If you save even more than $7,000 a year, you could have even more at retirement.
So, with all the expenses that you currently have, how do you save for retirement? That is the key question. Here are some tips that everyone should take to heart and share with their friends and family. These tips, by the way, came from my book “Achieve Financial Freedom: Big Time” that was written by me and my son Matt.
1You can’t get rich until you get your taxes down to the legal minimum. We have two tax systems in this country. One is to take your wealth as an employee, and one for self employed, small business taxpayers which is designed to create economic growth. Small businesses get deductions that employees don’t get especially as a result of recent tax reform legislation. Seriously, stop working overtime for a boss and consider starting up a side business. Who knows, you might even be able to quit that job. Also, get my book, “7 Simple Ways to Legally Avoid Paying Taxes” and subscribe to Taxbot University. You will thank me afterwards. Taxes can be the number one expense for most people exceeding what they pay for food, clothing and lodging combined. I can promise you that plugging your tax holes will make a HUGE difference in your lifestyle than if you overpay your taxes.
2Pay yourself first. If you invest your funds each year and force yourself to live on what is left over, you will find a way to do that. Necessity breeds success and innovation. One great way to get forced savings is to increase the amount withheld from your wages. this way you will learn to live on what is left over.
3ALWAYS max out your 401K contributions especially if there is a matching contribution by your employer. Don’t walk away from free money.
4If you have kids who will go to college, do everything possible to minimize their college debt. If they need to start off at a community college, so be it. If they need to attend the local state university, so be it. I don’t know anyone, regardless of the college attended, that was happy with having a lot of student loans. You don’t want these, and they should be minimized as much as possible. Moreover, do NOT guarantee loans for your kids. It is very tempting to do so; however, I was reading that 50% of all college graduates are either unemployed for at least a year after graduation or under employed working at dead end, low paying jobs. Parents who guarantee loans are being called upon to pony up the payments on these loans.
5Stop overspending: We all don’t need things. The key is do we need to buy the expensive stuff that we need? For example, you might need a new purse; however, do you need to buy a designer purse for $500? You might need a vehicle, but do you need a new vehicle when a used one with a warranty will work as well? Also, do you need a BMW when a Chevy will do? It is vital that you recognize what is needed vs what is simply a “want.”
6Don’t turn the thermostat in the winter and turn it slightly up in the summer. Did you know that for each degree that you adjust the thermostat up or down (depending on season) you save roughly 8% in energy costs?
Space limitation prevent me from posting more on this. However, to find other ways to cuts costs and increase savings, get my book, “Achieve Financial Freedom: Big Time”, which is available on Amazon.
The final part of this series will discuss the steps you should take before undertaking retirement. This will be posted on Friday, so, stay tuned.
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